Tag Archive: MXN

Cheat Sheet

The market always has taken the Fed's forecast for three rate hikes next year with a large dose of skepticism. The fed funds futures strip implies growing expectations that the Fed pauses after a hike in December and Q1 19. It is still unclear the direction of fiscal policy next year. It may be difficult for the Democrats to oppose making middle-class tax cuts permanent and an infrastructure initiative cannot be ruled out.

Read More »

FX Daily, November 19: Does Monday’s Calm mean a Storm is Around the Corner?

Overview: There is an uneasy calm in the global capital markets. Investors are digesting the weekend news, which includes the failure of APEC to issue a joint statement due to US-China tensions that we highlighted by dueling speeches by China President Xi and US Vice President Pence.

Read More »

FX Daily, November 16: Turning Brexit into a Dog’s Breakfast

Overview: It is the height of irony or tragedy that what was offered as a non-binding referendum on UK's membership in the European Union to bring the country, or at least the Tory Party, together is the most destabilizing event since the UK unceremoniously quit the European Exchange Rate Mechanism more than a quarter of a century ago. 

Read More »

FX Daily, November 15: UK Political Drama Roils Sterling

Overview: The resignation of the UK's Brexit negotiator after Prime Minister May had secured support from a majority of the cabinet sent sterling sharply lower.  Raab's resignation underscores the difficulty the Brexit agreement faces in the UK Parliament.  Sterling was hammered nearly 2.5 cents on the news and trade below $1.28.

Read More »

FX Daily, November 14: Dollar Comes Back After Yesterday’s Profit-Taking

Overview:  Investors are on pins and needles today.  Oil prices are trying to stabilize after WTI's outsized 7% fall yesterday, its largest in three years.  Global equities are heavier, dragged down by energy, but also larger than expected Q3 contractions in Japan and Germany, and a mixed bag of Chinese data that showed possible stabilization of the industrial sector though weaker consumption. 

Read More »

FX Daily, November 12: Sterling’s Losses Lead Dollar Rally

Overview: The US dollar is enjoying broad gains against most major and emerging market currencies. Sterling, dragged down by Brexit concerns, is leading the way. With today's losses, sterling has shed nearly 3.7 cents over the last four sessions. The euro, for its part, is at a new 17-month low (~$1.1250). 

Read More »

FX Daily, November 01: Dollar Slumps to Start New Month

Overview: It appears that month-end considerations deterred the dollar selling that the technical indicators warned was coming and as the new month starts, the dollar is offered. It is weaker against all the major currencies and most of the emerging market currencies.

Read More »

FX Daily, October 30: Another Attempt to Put a Bottom in Stocks

Overview: First, reports suggested that if China refused to make any trade concessions, the Trump-Xi meeting on the sidelines of the G20 meeting next month would not take the issue up.  Fair enough.  Then, new reports indicated that the White was prepared to take additional trade measures if there was no agreement between Trump and Xi. 

Read More »

FX Daily, October 25: ECB Overshadowed by Equity Market Drama

The Dollar Index broke above 96.00 yesterday and is consolidating today. Provided the 96.00 area holds, the next target is the year's high near 97.00. The euro has been confined to a little more than a quarter of a cent. Players seem reluctant to sell it below $1.14 and note there is a 570 mln euro option at $1.1420 that expires today.

Read More »

Macro Cheat Sheet

The dollar's recovery ahead of the weekend was aided by the stabilization of the stock market, where the S&P 500 managed to close back above the psychologically important 200-day moving average. Interpolating from prices, the market does not expect the President's criticism to alter the Fed's course.

Read More »

Macro Cheat Sheet

Rising US rates in absolute terms and relative to other countries, coupled with the policy-mix and US tax reform are the main drivers. The market has nearly completely discounted three more Fed hikes by the end of next year, while the Fed has signaled that four hikes may be appropriate.

Read More »

FX Weekly Preview: Next Week’s Drivers

It is a testament to the Federal Reserves communication and the evolution of investors' understanding that we can say that the rate hike that the central bank will deliver is not as important as what it says. A rate hike is a foregone conclusion. According to the CME's model, there is about an 85% chance of December hike discounted as well.

Read More »

FX Daily, August 28: Greenback Remains On Defensive

Corrective forces continue to weigh on the US dollar. Sometimes the narratives drive the price action and sometimes the price action drives the narratives. Currently the latter appears to hold sway. The dollar's downside correction began around the middle of the month, well before Powell's August 24 Jackson Hole speech.

Read More »

FX Daily, August 27: A Dog Day of Summer

Last week's dollar losses were initially extended in Asia before it came back bid. The euro briefly poked through $1.1650 for the first time in three weeks. However, the gains were sold into, and the euro finished the Asian session near $1.16, where there is a 782 mln euro option expiring, and 2.4 bln euros struck at $1.1625.

Read More »

FX Daily, August 22: Markets Take US Political Developments in Stride

News that President Trump's personal lawyer claimed he was instructed by the candidate to commit a federal crime and, separately, his the former campaign manager was found guilty on eight counts is hardly impacting the global capital markets.

Read More »

FX Weekly Preview: Five Traps in the Week Ahead

Officials have taken steps to make it more difficult and more expensive to short the lira, but that did not prevent a 5% slide ahead of the weekend. There is no interest rate, within reason, that can compensate for such currency risk.

Read More »

FX Daily, August 13: Turkey Drives Risk-Off, but Pressure Abating

The failure of Turkey to grab the bull by the horns, so to speak, and come to grips with the situation saw the dollar soar above TRY7.23(from TRY6.43 at the end of last week) and to ZAR15.55 (from ZAR14.09). The Mexican peso, the strongest currency this year, and which has been partially protected by prospects of a new NAFTA agreement has suffered as well.

Read More »

FX Daily, July 09: Possibility of a Soft Brexit Excites Sterling (too Early?)

After a little wobble, sterling has responded favorably to the resignation of the UK Brexit team led by David Davis. The idea is that a path to a softer Brexit is good for sterling.  In fairness, it is a bit early to reach this conclusion, and the softer dollar tone puts wind in sterling's sale. There is a GBP244 mln sterling option at $1.3375 that expires today. The June highs were set in the $1.3450-$1.3470 area.  

Read More »

FX Daily, July 02: Third Quarter Begins With a Thump

The window dressing ahead of the end of Q2 failed to signal a turn in sentiment. Equity markets have taken back those gains and more. The US dollar is broadly firmer, though it was coming off its best levels near midday in Europe, and the three-basis-point slippage puts the US 10-year yield at 2.83%, its lowest in more than a month.

Read More »

FX Weekly Preview: Macro Matters Now, Just Not the Data

The main concerns of investors do not arise from the high-frequency data that are due in the coming days. Last week, the somewhat firmer than expected preliminary May CPI for the EMU failed to bolster the euro. The stronger than expected US jobs data, even if tipped by the President of the United States, and the pendulum of market sentiment swinging back in favor of two more Fed rate hikes this year did not trigger new dollar gains.

Read More »